FANews
FANews
RELATED CATEGORIES

Complaints about security pension funds inundate PFA

04 November 2015 Muvhango Lukhaimane, PFA
Muvhango Lukhaimane, Pension Funds Adjudicator.

Muvhango Lukhaimane, Pension Funds Adjudicator.

Although numerous cases of non-compliance with the Pension Funds Act have been referred to the Registrar of Pension Funds, the Pension Funds Adjudicator continued to be inundated with complaints about security companies not fulfilling their obligations to the fund.

In a recent determination, Pension Funds Adjudicator Muvhango Lukhaimane also censured the Private Security Sector Provident Fund for submitting responses to complaints that were “erroneous and less than plausible”.

Ms MS Mmazwi complained that Afguard CC (second respondent) had failed to timeously register as a participating employer with the Private Security Sector Provident Fund (first respondent) and to timeously register her as a member thereof and to pay all provident fund contributions on her behalf, thus resulting in the understatement of her fund credit.

The complainant had been employed by the second respondent from 1 June 2004 and was still in its employment at the time of the complaint. She was a member of the first respondent by virtue of her employment.

The second respondent deducted provident fund contributions since commencement of employment. However, she claimed she did not receive benefit statements.

When she went to Absa Consultants and Actuaries (ACA), she was advised that she was not registered as a member of the first respondent.

The first respondent submitted that the second respondent became its participating employer on 11 October 2006 and was non-compliant in terms of Section 13A of the Pension Funds Act. Fund contributions were received up to January 2015 and allocated up to December 2010.

The first respondent also submitted that the complainant appeared in the provident fund contribution schedules received from the second respondent for the period January 2009 to September 2009. The second respondent failed to provide corresponding provident fund contribution payments for this period.

The first respondent averred that if the complainant was indeed employed as alleged, then the second respondent defaulted with the payment of provident fund contributions on his behalf for the period June 2004 to January 2011, May 2011, July 2011 to August 2011, October 2011, January 2012, March 2012 to April 2012, July 2012 to September 2012, December 2012, February 2013, December 2013 to February 2014, April 2014 to October 2014 and January 2015. Such default was in breach of Rules 4.3.1 and 4.3.2 of its Rules as well as section 13A of the Act.

The first respondent stated that the rules provided it with a remedy in the event that a participating employer defaulted on payment of contributions. In terms of Rule 4.3.2(b), the fund could only pay as much as it had received on behalf of the complainant.

The second respondent was afforded an opportunity to comment on the allegations made against it. No response was received from it.

In her determination, Ms Lukhaimane said the rules of a fund were supreme and binding on its officials, members, shareholders and beneficiaries and anyone so claiming from the fund.

According to the information obtained from the Companies and Intellectual Property Commission, the second respondent commenced its business in the private security sector on 19 July 1993 and was still in business.

The second respondent became a participating employer in the first respondent on 11 October 2006. The first respondent commenced on 1 September 2002. Thus, the second respondent ought to have registered itself as a participating employer on 1 September 2002 as it was already in business when the latter commenced. The second respondent failed to register timeously as a participating employer in the first respondent.

At the time of commencement of the complainant’s employment, the fund qualification service as set out in the first respondent’s rules required an employee to have been in service for a period of six continuous months of permanent employment with an employer within the private security sector, prior to provident fund contributions being deducted.

The complainant commenced her employment on 1 June 2004. Six months later she ought to have been registered as a member of the first respondent. The second respondent failed to comply with the fund qualification service as set out in the first respondent’s rules as the complainant appeared in the contribution schedules of the second respondent from January 2009.

The second respondent had a duty placed on it by the provisions of section 13A(1)(a) of the Act and the Rules of the first respondent to pay contributions and submit schedules to the first respondent indicating on whose behalf payment was being made.

The first respondent in turn had a duty to pay out benefits to the members. Such contributions were to be paid directly into the fund’s account in such a manner as to have the fund receive the contributions no later than seven days after the end of that month for which contributions are payable.

Ms Lukhaimane said that according to the submissions, the second respondent failed with the payment of provident fund contributions on behalf of the complainant for the period December 2004 to date. Such default was in breach of Rules 4.3.1 and 4.3.2 of the Rules of the first respondent as well as section 13A of the Act.

“The submissions from the first respondent in paragraph 5.9 above are clearly erroneous as they do not make sense.

“If the complainant appears in the contribution schedules for the period January 2009 to September 2009, it is not plausible that the outstanding contributions are for the period as submitted by the first respondent.

“Unfortunately, this scenario is not isolated. It has been a feature of the first respondent lately, to submit responses to complaints that are erroneous and less than plausible.

“This points to the lack of proper record keeping by ACA and is a violation of section 7D of the Act. For this reason, this matter is being referred to the Registrar of Pension Funds (“Registrar”) for her attention.

“Whilst numerous matters reflecting the lack of compliance with section 7D of the Act have been previously referred to the Registrar, this Tribunal has not seen any improvement,” she said.

She was critical of the first respondent’s administrator, ACA, for not allocating contributions received from employers, saying “ACA is failing to perform these statutory duties towards the first respondent which in turn affects members of the first respondent”.

Ms Lukhaimane ordered the second respondent to register as a participating employer with the first respondent with effect from 1 September 2002.

The second respondent was ordered to register the complainant as a member of the first respondent with effect from December 2004 to date.

The first respondent was ordered to allocate all contributions received from the second respondent for the period January 2011 to January 2015. , within three weeks of this determination;

The second respondent was ordered to submit all outstanding contribution schedules for the period December 2004 to December 2008 and October 2009 to date to the first respondent in order to facilitate the computation of the complainant’s outstanding contributions, failing which the first respondent must reconstruct the complainant’s contribution schedules based on the information already in its possession.

The first respondent was ordered to compute the arrear contributions due by the second respondent, together with late payment interest owed by the second respondent.

The second respondent was ordered to pay to the first respondent arrear contributions for the period December 2004 to date, together with late payment interest.

Finally, the first respondent was ordered to provide the complainant with a detailed benefit statement reflecting all provident fund contributions received on her behalf.

Quick Polls

QUESTION

What is your one-liner for the 2024 National Budget speech?

ANSWER

Creepy failure to adjust income tax, medical tax credits
Overall happy, it should support economic growth
Overall unhappy, soaring public sector wages and broken SOEs suck..
There are too few taxpayers, too many grant recipients.
fanews magazine
FAnews February 2024 Get the latest issue of FAnews

This month's headlines

On the insurance industry’s radar in 2024
Insurers, risk managers unsure of AI’s judgement credentials
Is offshore the place to be in 2024?
Gap claims: erosion of medical benefits, soaring specialist fees
Investments and retirement… is conventional wisdom under threat?
Subscribe now